Jefferies Upgrades Lincoln National to “Hold” Rating
Investment bank Jefferies has upgraded its rating on Lincoln National Corporation from “Underperform” to “Hold.” Jefferies has also raised the price target for the insurance company’s stock to $26.00, up from the previous $22.00. This move comes after Lincoln National’s shares experienced a 4% dip in performance.
The upgrade is based on two key factors cited by Jefferies. Firstly, the expected Risk-Based Capital (RBC) ratio is projected to be around 425% following the sale of the wealth management segment, aligning with the company’s target. Secondly, there is increased clarity on Lincoln National’s strategy to boost its Free Cash Flow (FCF). The company has provided guidance indicating that by 2026, its FCF could reach approximately $0.8 billion, surpassing Jefferies’ previous estimate of $0.6 billion and nearing the pre-pandemic and Strategic Growth and Underwriting Excellence (SGUL) charge run-rate of $0.9 billion.
The revised price target of $26.00 reflects Jefferies’ more positive outlook on Lincoln National’s prospects. The company’s progress and strategic plans are seen as moving in a favorable direction, which is reflected in the analyst’s updated expectations.
Additional context can be found in the latest data from InvestingPro. Lincoln National currently has a market capitalization of approximately $4.35 billion USD. Despite negative revenue growth of -37.95% over the last twelve months as of Q4 2023, Lincoln National has shown strong returns in the past three months, with an 18.36% price total return.
Two noteworthy tips from InvestingPro for Lincoln National are the expectation of net income growth this year and the company’s consistent dividend payments. Lincoln National has a history of maintaining dividend payments for 54 consecutive years, with a current dividend yield of 7.02%. This commitment to returning value to shareholders, coupled with the expected profitability for the year, may signal stability for investors.
Although the company’s P/E ratio currently stands at -5.21, indicating recent unprofitability, analysts predict a turnaround as Lincoln National is expected to become profitable this year.
Analyst comment
Positive news. Jefferies has upgraded Lincoln National’s rating to “Hold” and raised the price target for its stock. The upgrade is based on the company’s expected Risk-Based Capital ratio and increased clarity on its strategy to boost Free Cash Flow. The revised price target reflects a more positive outlook, suggesting that Lincoln National’s progress and strategic plans are moving in a favorable direction. Investors may find stability in the company’s consistent dividend payments and expected profitability. The market is likely to respond positively to this upgrade.
